CAR-MAKERS selling into the Australian market face potentially expensive emission penalties that industry analysts say lead to a 60 per cent fall in volumes and the possible exit of some brands.

The prediction has had a sober reaction from most of the automotive industry, but the boss of Kia Australia says he’s not opposed to the introduction of the new vehicle efficiency standard (NVES) and thinks the industry will adapt without serious changes.

Kia Australia CEO Damien Meredith

“I’m not as negative on the outcome of NVES as the report,” Kia Australia CEO Damien Meredith said of the Pitcher Partners ‘white paper’ report to its clients released two weeks ago.

Pitcher Partners warned in the report that unless NVES regulations were eased dramatically, the Australian new car market could fall by up to 600,000 units a year. 

It said car price increases due to NVES penalties could, in some circumstances, take as much as $12 billion extra out of new car buyers’ pockets over the next five years and that the increased cost of buying new cars would make sourcing nearly new and used cars from overseas more attractive. 

The analysts’ paper also contained a deep dive into the full ramifications of the NVES regulations and showed vehicle sales could fall to 450,000 units in 2029.

Mr Meredith isn’t fazed, saying “I think NVES is a good thing”.

“If car manufacturers don’t move into additional EV sales then they will have to pay the penalties — they have a choice,” he told GoAutoNews Premium last week at the launch of Kia’s new EV, the EV4 sedan.

“They either take it out of areas where they may have had advantages in exchange rates, or they put the prices up and the consumer pays. That way, it tests the strength of the brand.

“So I’m not as negative about the future as the report indicates. 

“The other thing is that it is the responsibility of the manufacturer to ensure that it always … always … supports the dealer network to keep them in a profitable situation.”

Mr Meredith said “there’s no recourse on NVES.”

“I’m not as negative on brands leaving the market because of NVES. The market is definitely dynamic – there’s no question about that – and is moving at a pace that we have not seen before, and we have to adapt to that. 

“If you want to survive in this market then you have to be quick and nimble and you have to make decisions that are right for the consumer, right for the dealer network and right for the brand.

“It’s challenging, there’s no question about that. It’s not going to be easy, but it is exciting. You either compete or leave.”

Mr Meredith said that the introduction of NVES was forecast and for the industry, “was expected and wasn’t a surprise”.

“I think that if you look at other countries and other economic zones you could see what was occurring and how it would relate to Australia,” he said.

“I’m proud that as a brand, Kia has been at the forefront of developing EVs and seen the EVs grow in the market. 

“But we have to keep doing that. The other brands talk about consumer choice but you have to direct the consumer to what is the government’s decision. 

“We (Kia) embrace it. We will increase our EV range based on what the consumer is increasingly asking for, and also in response to the NVES.” 

He said that he believed Kia Australia had done “a pretty good job” with EV3 and EV5 and “we think we can continue to grow those two”.

“The EV6 (Kia’s first EV in Australia) did a fantastic job in haloing what Kia could do, and EV9 the same. So we did this first but they built the brand and helped sales.”

Kia Australia is coming off the back of a record sales year in 2025 and believes it can increase sales again this year.

It also believes EVs will increasingly play a role with the company’s future and in supporting the profitability for itself as an OEM and for its dealer network.

Much of the outlook centres on product pricing and how much the consumer is prepared to pay.

While current thinking is on the necessity to introduce the lowest priced EVs as possible, Mr Meredith is far from convinced that this is the correct path.

“There is a sense of reality occurring regarding EV pricing,” he said.

“The pricing will get sharper as time goes on. By sharper I mean, better value.” 

He said that a large slice of new-car buyers choose the top-end version. In the case of the EV4 released last week, he estimates that 40 per cent will opt for the flagship GT-Line version ($64,690 plus costs) while only 20 per cent – of which the majority are likely to be fleets – would look at the entry-level Air version at $49,990 plus costs. The other 40 per cent would likely choose the mid-spec Earth variant.

“We’re not looking at bringing in a cut-price, low-spec version of the EVs,” he said.

“We have to be sensible about this. We have to give the consumer a great choice and a positive experience with the product. 

“There are a multitude of reasons why we bought the EV4. We didn’t have a passenger car EV, but that also means we have another model to meet NVES requirements. The more we sell, the better it is.”

Pitcher Partners white paper said, in essence, that NVES-driven carbon costs could see annual new-car sales fall materially over the next few years if consumer behaviour doesn’t shift at the regulations expected pace.

“This matters because most franchised dealers remain structurally weighted toward new-car volume, while the broader Australian market already operates on a predominantly used-car mix,” it said.

“If volumes contract as expected, that imbalance becomes a real commercial risk.”

But it added that this change was also a “moment of huge opportunity.”

“Dealers who thrive will be those who:

• Rebalance toward used, near-new and alternative supply channels
• Rebuild skills-based selling and pricing discipline
• Take back ownership of supply chain and customer outcomes, rather than outsourcing them entirely.

“The new-car market might get smaller but that doesn’t mean dealer profit has to,” said the company’s lead of motor services Steve Bragg.

“The years ahead will reward dealers and OEMs who demonstrate operational discipline, invest in their people, protect their culture, and maintain a relentless focus on the fundamentals.

“The industry is not in decline. It is in transformation. Those who adapt will thrive. Those who wait for the ‘old days’ to return will not.”